This post is part of my series of thoughts on workforce participation. In particular, this follows up on an earlier post on the idea of conscripting labor similar to drafting unwilling workers into a job, in contrast to the goal of striving to have a happy workforce. This post takes a different point of view of workers being more strategic in their thinking about when and how to engage in the workforce. Some people are not seeing a requirement or even benefit in being employed continuously, but instead there may be a benefit to hold out and wait for appropriate opportunities or conditions. The modern environment of rapid change makes possible this more discriminant application of labor. A new job involves an investment by the individual where the first few months the person puts more into the job than he gets out of it. The later payoff may never arrive if the job description quickly becomes obsolete. It makes sense for the worker to seek opportunities that will last rather than to lose time in a dead-end opportunity.
Meanwhile, the short-lasting dead-end jobs (or at least offering little promise of being otherwise) still need to be filled. There are qualified or easily trainable people who can fill the job immediately but they do not volunteer for the opening. There is a need to entice this reluctant worker. This enticement involves social incentives of offering more luxurious spending opportunities and social penalties such as the mandatory but expensive healthcare insurance that is not excused by absence of work. These enticements to work are comparable to conscripting workers in the sense of getting them to work contrary to their preferences. The enticements are fairly compelling even though they do not involve the use of force.
In the earlier post on conscripted labor, I imagined hiring people who did not volunteer for the job may provide a benefit by adding drama to the workplace. This is different from the already hired employee who is currently unhappy with the job despite his earlier enthusiasm: that person is on the staff is that initially he volunteered for the job, perhaps thinking it would be fun. In contrast, the conscripted labor never had any interest in the job, employer, or market. Conscripting his labor will require employing him contrary to his own wishes.
I imagined that there might be a benefit to conscripted labor in the same way that the military unintentionally benefited from the draft. The unwilling draftee presents will challenge the organization from within through any available opportunity, even if it is something small. The conscript introduces an element of disruption or chance that would not occur with a more enthusiastic and ambitious volunteer force. I conjecture that the military benefits from people within who do not aspire to make the military their career and where the leadership knows this to be the case. The conscript has some authority by the fact that he did not volunteer for the position and is eager to leave. Even the additional disciplinary actions will attract the attention of the leadership. I have not studied this so it is just my hunch that there must be some effect on the organization when the organization has non-volunteers. I suspect some of that effect is beneficial compared with a purely voluntary force with fewer reasons to complain.
In the modern workplace, there is a high value placed on teams. The ideal is to have happy teams. The employer seeks out people who are good team players or who will be a good fit for the existing team. Within the team, there are activities to build and strengthen the team. The work may be hard, challenging, and frustrating, but the team seeks to find something that they can commonly agree upon as being fun. The ideal is that everyone on the team will find something they enjoy about being on the team.
My suggestion of conscripting labor would introduce into the team some who do not enjoy anything about the team. They may learn to tolerate the team, but they will never enjoy it. The conscripted members will be seeking their earliest opportunity to exit. Their presence on the team challenges the leadership to motivate the reluctant worker and challenges the team to accept that someone in their team does not enjoy what they enjoy. This internal discomfort can provide the stimulation to innovate in a way that a more harmonious team would never innovate. Again, this is just my hunch.
In any case, the current job market works by seeking volunteers. The employer offers a job description but the prospective employee must take the initiative to apply for the job opening. This initiative at least suggests that the applicant is volunteering with the job. The interview process further tests the eagerness of the applicant to be part of the team in addition to the goals of seeing if the applicant has the skills and would be a good fit. The hired employee will be a volunteer.
In an earlier post, I described the modern hiring practice as employers seeking applicants for precisely defined job descriptions. The employer offers some job opening with a tightly defined job requirement. The advertises the job opening and waits for applicants to volunteer for the position. The job of the hiring manager is to make a good choice among these available volunteers in terms of meeting the right level of skills and enthusiasm. The weakness of this approach is that it relies on the voluntary initiative of qualified people to apply for the position.
There may be citizens of this country who are well-qualified for the position and would find this job to be some kind of career-advancing opportunity. The problem is that they are not volunteering to apply to the position. The modern hiring process is dependent on voluntary applicants for job openings.
Much of the reason why high-technology companies want more H-1B visas is because qualified citizens are not volunteering to apply to the openings even when the opportunity would be an advancement in career. Foreign citizens have an added incentive of migration to USA to encourage them to volunteer for the job. As employers notice the only volunteering applicants for a position are foreigners, they will demand more H-1B to access this labor.
I question the degree of volunteerism of new employees or job applicants. There are societal pressures that provoke an individual to seek a job. The job seeker may go through the motions of applying and of presenting his eagerness for work despite his preference to spend his time elsewhere. His preferences may be in some job that he can not obtain or in an activity that involves no employment at all. The entire hiring process gives an illusion of voluntary workplace as sometimes labeled as “at will” employment. The employee is likely not a volunteer in the ideal sense that the employer desires.
Obviously, the employment is usually not purely voluntary in the sense of desiring the specific activities of employment. There is usually a need to earn money to pay living expenses at the desired standards. The need to earn money makes the taking of a job less voluntary. Often this category of employment is described as under-employment: where the person is working but not at the job he would prefer to have. There is an element that such labor is conscripted, not by the employer but by the need to earn spending money.
People seeking work in order to pay for their desired standard of living will fall into categories of actively seeking work because they are either unemployed or under-employed. This series of posts about non-participating workforce considers the separate category of people who are eligible to work but are neither working nor seeking work. In particular, I am focusing on the group who are not independently wealthy so that they are forgoing an opportunity to a higher standard of living that would come if they were working. This group is dodging the conscription to work.
Broader political and economic discussions often emphasize the statistics of unemployment and workforce participation rates. The overall economy benefits from having more people working at their best potential. For society’s benefit, there is a duty for people to work if they can. The declining workforce participation rates robs society of its full potential. These non-participants people are dodging their duty to work. We can interpret this as being some type of breakdown in the social values that provide incentives to work (beyond basic expenses) or penalties for not working (mandatory expenses are not high enough).
In an earlier post on a proposal for an updated form of bicameral legislative government, I proposed two permanent houses with distinct voting populations. Depending on their standing in society, people would be represented either in the house of consumers or the house of producers. In that discussion, I suggested that the population represented by the house of consumers would face an obligation to work as assigned by government based on the level of allowance given to them to consume goods and services.
The consumer station in life is an allegory for how most people live today. We work at our earning potential in order to enjoy the level of lifestyle we desire. Our society presents this as a choice so that we think we work voluntarily, but the desirability of a certain lifestyle forces the decision to work at the level of maximum earning potential. In that future-government post, I suggested that people living under the house of consumers would not experience life much differently than they experience it today. Presently, our government is fully in control of consumers and there is no representation for population of those more motivated to be producers. My proposal was to segregate the voting population where people are either consumers whose consumption allowance is guaranteed with the obligation to be employed at an appropriate level, or producers who have no guarantee or safety net in terms of income but are free to use their time to freely risk personal losses in pursuit of unlimited gains. Our present government lacks a permanent house for producers.
In the above metaphor, the population represented by the house of consumers will have an incentive to pursue careers that will merit higher spending allowances. The model I proposed would grant the individual the spending allowance based on achieving the required credentials or experience, but that individual must agree to accept some work at the level he is qualified to work at. There may be some latitude to choose between competing jobs, but there is no option to remain unemployed if there is at least one valid position available. When I wrote the earlier article, I intended it to be s serious proposal for governing the consumer-population this way. But for this current post, I am using that story as an allegory to the idea of conscripted labor. As I mentioned in the earlier post, there is very little difference in experience of the proposed consumer citizen and the most people living today who are participating in the labor market. Participants in the labor market include the actively employed, the under-employed, the unemployed but actively looking, and the discouraged unemployed. Being active in the labor force is analogous to my futuristic house of consumers except there will be fewer of the latter employment categories because of the obligation to accept whatever job that the government identifies as appropriate and available.
In the world of the house of consumers, I imagine that people have options to change jobs to better suit their interests but they do not have the option to remain unemployed when a qualifying position is open. The members of the house of consumers are conscripts in the labor market.
The house of consumers is an allegory of our present labor market. We strive for certain credentials that will permit us to enjoy a certain living standard based on the income. We may choose a career path based on some imagination of what kind of work will make us happy, but the investment into those careers will constrain our work choices to participate in that market. In recent years, that obligation is amplified by high student loan debt that requires a substantial income to make the payments.
The house of consumers allegory also defines the sense of relevance. In my proposed future government, people will either belong to the population of consumers or the population of producers. The relevance of a citizen is their active participation in their station. Consumers are relevant when they are employed or available to be assigned a job. In contrast the producers are relevant only as long as they can sustain their private resources to permit independence. Most people will be consumers. Consumers are consumers because they have jobs. There would be no option for consumers to decline work because they have no independent wealth but this is not a problem because their allowance is guaranteed. Again, the house of consumers is an allegory for most workers in modern society. People need jobs, and specific types of jobs, in order to maintain their relevance.
When young adults first enter society, they are challenged to find a way to be relevant to the market. With few exceptions, most people do not have the luxury of inheriting the relevance of their parents by becoming apprentices in the parent’s business or enjoying the benefits of their parent’s prestige to start careers. Most young people must attempt to build their own future. They choose a career that they think will deliver success for them. They invest in earning credentials to enter that career and they invest in entry-level positions (or even unpaid internships) to get them started.
There are different levels of relevance beyond the basic relevance of being able to earn a living. An individual’s personal history can also constrain the opportunities for relevance. For example a person may enjoy success in school, either academically graduating near the top of the class, or socially by being very popular among peers. This early success constrains the individual to pursue options that not only build on their earlier success but also prove that they can fulfill the promise suggested by their earlier success. Similarly, when a person enters a particular trade, the future options are constrained by the need to prove he can succeed in that trade. Beyond the basic need to earn sufficiently to support a desired lifestyle, there are constraints to make future decisions that are consistent with past accomplishments.
People who apply for open positions are not fully volunteering. They are applying because their history obliges them to apply. The job opening may specifically require their specific history. If they are going to advance in terms of more relevance (higher pay, more prestige, etc.), they need to apply for positions that match their history. In order for such advancements to be voluntary in the sense the employer seeks, the older more mature worker must remain committed to his more youthful aspirations. For those who continue to advance in their careers, I will give them the benefit of my doubts that they doing so because they continue to love what they are doing. Nonetheless, I do have some doubts that their choices are made freely. One way to advance in terms of prestige or earning potential is to advance incrementally in a career choice made much earlier despite their later opinions about what would make them happier.
The above discussion describes people who continue to participate in the workforce as either employed or hoping to become employed. Society still has some strength in terms of conscripting their labor. These individuals will apply to job openings that they qualify for, or that will advance their careers.
There is a growing population who are not participating in the workforce. Non-participants are not even applying to job openings that they may qualify for. There is a lot of diversity in this group. Some have never participated in the job market. Others have found other means to subsist without participating. for example, one may have a wage-earning spouse.
What makes labor participation rates interesting today is the sustained multiple-decade decline in participation. There always was and always will be some people who will avoid any type of paid employment. These should represent a steady rate over time. Instead, we observe a declining rate of labor participation. A broader portion of the population was actively working in the past than currently.
The decline in workforce participation rates needs an explanation. Explanations include the obsolescence of older jobs, the lower quality of newer jobs, the highly specialized nature of newer jobs making entry difficult. Another explanation may be that this is a direct consequence of the aging demographics of the workforce. Probably all of these are contributing to the decline, but each one affecting a different group.
I am thinking there is another contributing group who are actively dodging the draft into the workforce. This group consists of individuals who will welcome an opportunity to return to the workforce and will benefit from the increased income, but this group is being very selective about pursuing job openings that they can reasonably obtain.
A good portion of the not-employed professional workers may be pursuing entrepreneurial ventures, particularly related to the current technology or social media trends. Until the project can get started with some seed capital or a business plan, these people have their time tied up pursuing their business ideas. This group may make up a portion of the economic numbers of non-participating labor. This should be a temporary condition because either the business eventually takes off in a way that will employ the workers, of the idea will die leaving the workers out seeking some other form of employment. The temporary nature of this non-working status in pursuit of a business plan should keep their overall numbers relatively constant over time. I don’t think entrepreneurial ventures explains the steadily declining number of participation in workforce.
A more likely explanation for the declining workforce is that people are finding unrecognized businesses such as cash-only businesses that can avoid taxation or regulation. Almost by definition, these are hard to quantify because if the businesses can be identified, then the government will identify them for collecting taxes and imposing regulation. I have no information on these underground businesses, but I strongly suspect they are plentiful.
I want to focus on a different explanation suggested by my own personal experience. More people may be opting out of the notion of continuous employment. This may be a cultural shift where the earlier ideal of being continuously employed has fallen out of favor. Instead we are increasing accepting periods of voluntary unemployment as a norm. A cultural attitude of more frequent and longer periods of unemployment can in aggregate result in a declining number of participants in the workforce. I am extrapolating from my own willingness to break up a continuous employment. I imagine that I may not be alone. (The addendum at the end of this post presents an alternative motivation).
This willingness to break up employment may be a logical consequence of the observation of how quickly the work place is changing. Job openings are increasingly more precise and narrowly defined with very specialized qualifications. Fewer jobs are open to people on the basis of their having a strong work ethic alone. The jobs require pre-qualification for a specialty where that qualification often includes many years of prior experience in a particular narrow field.
By the time these specialized skills become in high demand, the skills are only a few months or years from becoming obsolete. A job in a hot field has a very high chance of requiring skills that will be unemployable in few years. If one does not have the skills for the current hot jobs, it would foolish to invest in obtaining the necessary qualifications. By the time the qualifications are earned, the jobs will be nearly at the end of their life. Usually, these hot fields require earlier relevant experience that must have started before the skills became in high demand. The ones who benefit from the hot jobs are the ones who started when the skills were not in demand or even not a primary part of the earlier job. Their earlier investment in some obscure technology pays off when the technology finally becomes prominent in job descriptions.
Alternatively, there is little if any opportunity to enter the hot field at the time when they are in the peak demand. The jobs required prior experience and that experience had to start before the skills were in demand.
One can obtain some entry-level training in some new skill, but without the experience, the available jobs will probably be in a subordinate role until experience is gained. By that time, the skills will likely be nearly obsolete.
Most current in-demand jobs are not worth the effort to pursue unless one is already qualified. As I mentioned in the previous paragraph it may be possible to gain some subordinate role in a hot field during its last days, but this will not pay as well as the experienced positions and it will probably be much more demanding in terms of doing tedious aspects of the work under supervision of the more experienced person. There is little chance to gain anything from the investment in the hard work with lower pay.
I acknowledge that many people may find such a job to be just what they need right now to pay their bills. My point is that there is a population who decline to pursue these opportunities despite their ready availability and their ability to obtain the requisite training for the subordinate position. The future prospects for the job is not worth the effort involved.
In the context of conscripting labor, these openings do exist and there are people who are available to fill these roles. The problem is that the available people are not volunteering to fill the role. The businesses attempt to lure in these reluctant job applicants by projecting the recent increase in demand as growing indefinitely into the future. Anyone who is paying attention will know that this is unlikely. Business innovations will quickly make the current hot jobs obsolete. Hard to fill jobs are obvious targets for innovation to supply technical solutions to the labor shortage.
In an earlier post, described this inevitable outcome in the field of data science. Data science is a great opportunity for people with extensive prior experience in the specific skills (Hadoop suite, machine-learning, big-data statistics, etc). However new data scientists entering the field soon will find themselves competing with off-the-shelf software solutions that solve most of the problems that previously required custom solutions.
Another readily apparent observation is that getting on board at the peak of some technology will likely trap one into a maintenance or sustaining role for a technology that remains relevant for one employer but nowhere else. I recall the lessons early in my career with the examples of the programming languages of COBOL and FORTRAN. Already by the early 1980s when I started college, it was clear these were obsolete technologies that were not worth the investment for someone starting a career. At that time, there were still jobs for these fields, but many of them required years of experience. I then watched the field evolve over the following two decades when finally the Y2K problem emerged and exposed how much businesses were dependent on old-timers who had stuck around to sustain the old software. These legacy workers got lucky in having a burst of new work for about 18 months before the opportunity vanished when the first two digits of the year changed from 19 to 20.
Most old-technology supporters are not so lucky. The technology still has value for the company and they will continue to pay for the right staff. Because the technology is increasingly obscure, the company has a harder time justifying paying the higher salaries for these roles. As a result, the companies add additional duties to the job in order to justify fully funding of the position commensurate with prior wages. The continued employment in an obsolete technology plus the added make-work limits the opportunity to prepare for a new job. This arrangement works out best when the person is nearing retirement as what happened with the Y2K scenario for COBOL programmers. It is not a good option for someone who is younger.
In modern times, the reality of the workplace is that the environment is constantly changing very quickly. Getting hired into a hot job one day can lead to returning to unemployment a few months later. Workers are adapting to the new reality of constant changing work. One of the adaptations is accepting the ideals of life-long learning and gaining new skills to be prepared for the next job that will be needed sooner than one may anticipate. It is reasonable to imagine another cultural shift to be more strategic about when to be employed. There is nothing to gain by staying on a dying job and there is little to gain by catching a job at the peak. The rational approach is to get out before the job dies its natural death and strive to get out in front on a wave that has not yet developed. A portion of the non-participating labor may be behaving like the water surfers swimming further out, ignoring the immediate waves, in order to catch a wave at its beginning so as to allow for the longest ride and then leaving the wave before it crashes ashore. Good surfers spend more time swimming than they do surfing.
Addendum: after writing the above, I encountered this article that describes another form of non-participating labor:
I’d wanted to explore and write about Eastern Europe after the fall of the Berlin Wall, which I did for several years. It was truly a great adventure: It changed my life, and it was a lot more interesting than thinking about what it cost, which was a lot. There’d always been enough money. I assumed there always would be. (I think this is called denial.) So another dip into the well.
I admit, this did not occur to me, and perhaps there are many more who take similar opportunities. I disagree however with his conclusion that this led to his becoming poor. In my above discussion, I think the modern rapid turnover of jobs and careers will result in many others sharing the same fate but without his wealth of experiencing multiple year expensive foreign travel.